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Expense Management: The CEO's Guide
Chances are you became the CEO of a startup because you like to build something and see it grow. You most definitely did not become CEO because of a burning passion for Excel and expense management. If you did, that's nice too - we're in no position to judge.
This article was originally published here.
As a CEO, you know that underneath every milestone and every performance target your company achieves, there are hundreds, if not thousands, of unappealing daily decisions that deserve your attention. Processing and payment of corporate expenses are most certainly one of them.
An integrated expense management solution will save you and your team time, provide better tracking of your operations, and help you focus on the real heart of your work. After all, that's what you're here for!
Expense Management: The Five Fundamental Principles
Not knowing where to start with expense management can be confusing. For the majority of startups, expense management processes tend to evolve in response to day-to-day requirements and personal preferences. In these early stages, you'll be mostly happy to stay on track - you probably won't have time to make sure everything is perfect.
In fact, you may find that you've gone too far down the wrong path before you can afford the luxury of seriously analyzing your expense management systems and procedures. However, you may want to take a close look at how you can improve them to better meet the needs of your business and support your team.
By focusing on the following five fundamental principles, you will be able to manage your company's expenses effectively and efficiently and focus on the fun parts.
1. Build a strong finance team / startup-finance-team
As you read this document, your finance team may be composed of only you. Fear not, lone wolf: as soon as your business starts to grow - or receives a large cash infusion - you'll probably put together a strong finance team to help you.
As soon as your company can afford it, you'd be doing yourself a favour by hiring a few people who are finance savvy. This will not only make your life easier, it will also help you protect your cash flow and avoid compliance problems with local tax authorities.
Your finance team will be responsible for managing your company's revenues and expenses, including forecasting and budgeting. They will be there to help you define the direction of the company's future development and ensure that your day-to-day activities contribute as much as possible to achieving this vision.
Tasks such as filing expense reports and tracking company expenses are time consuming and often tedious. You should be more concerned with finding customers and growing your business.
However, even without this future financial dream team, you will still need to establish some basic concepts in expense management:
Standardized processes: How are expenses paid and reimbursed?
Clear expectations: Does your team know what is acceptable and what is not?
Defined roles: Who is responsible for each step in the process?
Security: Is there sufficient review and control of expense payments?
Shared Responsibility: Is everyone on your team familiar with your system(s)?
Ensuring that your team shares a common understanding of these basic principles will save time and reduce the potential for confusion. By sorting them out, you will be able to focus on your core business, which is to serve your customers and grow your business.
2. Ensure simple and convenient fee validation
Knowing how your company spends money is vital for every CEO, especially if you don't yet have a dedicated CFO. As your business grows, monitoring and tracking can become more difficult. You need a simple and clean way to validate expenses without generating extra paperwork, preferably before the money is spent.
It's easy to track when you have a small team - more often than not, putting all receipts and invoices in one place will do the trick. It's more difficult when the team comprises 10, 20 or even more people. At this stage, you will need to think about how budgets are allocated, what expenses need to be authorized and how your employees need to itemize their expenses.
Real-time expense validation is a practical way to ensure confidence and clarity of each company's expenses. It also allows you to have continuous monitoring of company purchases, allowing you to track expenses as they occur, rather than having a snapshot after the end of each month.
In addition, automating recurring expense payments (for example, monthly phone bills or catering expenses) can also help reduce unnecessary paperwork. Having fewer recurring tasks means more time for the bigger things, not to mention a better chance of still being sane at the end of the year.
3. Keep track of all expenses what is erp
There are few things in the world of startups that worry us as much as the imminent threat of an audit. Unfortunately, it will come for your company in due course.
When it does, you need to be ready. That means keeping a detailed record of all fee payments made, along with the relevant proof of purchase. It also means having a system in place to help categorize and itemize these fees, and to group and break down the information in the most useful way possible.
A standardized and integrated expense management system is one of the best ways for you and your team to be prepared for audits. A fee management system will help you comply with tax regulations and reporting requirements. This means that you will have all the elements you need to go through an audit with peace of mind.
Trust us - by getting geared up early, you'll reduce the risk of problems during any audit. Having a dedicated expense management system helps minimize the risk of costly and annoying distractions later in life.
4. Use flexible and secure payment methods
Initially, both you and your team will heavily rely on the company's credit card. This will become tricky as your team grows, especially if you have vendors and other employees who charge fees on a regular basis and at various locations.
Luckily for you, there are a number of interesting features available in addition to the traditional corporate card. Many companies today offer payment cards that are tailored to each individual employee, with monthly credit limits that can be set on an individual basis or even broken down by expense category (for example, travel, accommodation or marketing expenses).
As CEO, this tailor-made offer enables you to quickly and simply monitor your team's daily expenses and reduce the risk of unpleasant unexpected surprises at the end of the month.
Moreover, the advent of virtual single-use credit cards has made expense management even easier. Staff can now generate virtual credit cards that will be used solely for specific purchases. This enables real-time monitoring and approval of purchases and reduces the risk of fraud and misuse. This translates into greater peace of mind.
5. Finding effective accounting help
You probably won't be lucky enough to have your own in-house accountants - at least not at first. But you'll need the help of experts who audit and review your accounts if you want to avoid encountering major problems later on.
A comprehensive expense management system will provide accurate and detailed information to help your accountant do his or her job quickly and efficiently. This means less hassle for everyone involved and, more importantly, less risk of billing headaches when the work is done.
No more paper - go digital!
As a startup founder, you are probably familiar with the huge set of startup tools already in place. And just because finance and accounting are not attractive doesn't mean that there isn't a range of interesting tools to help you better manage your business.
Why not consider adding the following tools to your stack?
Establish fee limits for each team member and fee category, track payments in real time, authorize expenses as they occur, and get rid of the curse of "paper" receipts.
We would be pleased to discuss this with your accountant. Your priority should be to ensure that the software you have chosen is flexible and works with your other tools, notably your expense management system. Specialized feedback software can help foster employee engagement and motivation by regularly seeking feedback on project performance, business strategy and operational needs.
Most likely you will already have it in place for your marketing, sales and customer care. But consider including your operating expenses in your budget to get the big picture and make sure you stay within your budget. We understand (as CEO) that you have much more exciting things to do than worry about your company's expense management processes. You have goals to achieve!
By investing promptly in an integrated expense management system, both you and your team will be able to stay on top of the details and not let them get in the way of achieving your long-term goals. Fast and efficient expense management saves time and effort, ensures clarity and consistency in your staff's purchases, and reduces the amount of paperwork that ends up on your desk.
Most importantly, a good expense management system will give you the comfort and assurance of real-time expense tracking and help your company meet regulatory and audit requirements. Empower yourself to focus on what's important, and don't worry about losing yourself and your team in minor details.
As a CEO, expense management is probably not at the top of your company's priority list. After all, you have the whole world at your fingertips. However, managing your expenses and those of your team doesn't have to be tedious.
Focusing on the fundamentals will help you get things done and avoid hassles. Establishing a dedicated system for effective and efficient cost management will save you time and allow you to focus on more important things. An integrated and comprehensive expense management platform like Spendesk can help you. Spendesk offers intuitive expense monitoring, simple and convenient approval processes and flexible payment methods, all without sacrificing security.
If you manage to fully understand these fundamentals, you will spend less time worrying about details and more time doing what you love: growing your business.